Assume you sell short 100 shares of common stock at $30 per share, with initial margin at 50%. The maintenance margin is 35%. How far does the priceof the stock rise for you to get a margin call?a) $33.33b) $34.62c) $32.14d) $38.74e) $40.50

Stock price:The market value of a certain stock or share in a corporation is referred to as the…

Answered: Assume you sell short 100 shares of…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Suppose the call money rate is 4.5 percent, and you pay a spread of 2.5 percent over that. You buy 800 shares of stock at $36 per share. You put up $14, 400. One year later, the stock is selling for $48 per share and you close out your position. What is your return assuming a dividend of $0.65 per share is paid?
You decided to invest $10,000 of your savings in a stock whose current price is $25 per share. To utilize the benefit of margin investing, you borrowed an additional $10,000 from your broker and invested $20,000 in the stock, If the maintenance margin is 30 pereent, at what price will you receive your first margin call?
You short sell 1,000 shares of RAJ stock at a price of $70. Your initial margin is 50%. If you cover your RAJ short position at a price of $65, how much is your return? A. 14.29% B. 12.31% C. 17.39% D. 15.65%
You are bearish on Telecom and decide to sell short 160 shares at the current market price of $65 per share. a. How much in cash or securities must you put into your brokerage account if the broker's initial margin requirement is 50% of the value of the short position? (Round your answer to the nearest whole number.) b. How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short position? (Round your answer to 2 decimal places.)
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Suppose the call money rate is 6.8 percent, and you pay a spread of 1.9 percent over that. You buy 1,300 shares at $93 per share with an initial margin of 55 percent. One year later, the stock is selling for $101 per share and you close out your position. What is your return assuming no dividends are paid
You short sell 200 shares of stock at $48.23 per share and cover your short position three months later at $44.66 per share. If your broker's initial margin requirement is 65%, and the maintenance margin requirement is 45%, what is your rate of return? 100tne
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An investor short sells 100 shares of a stock for £50 per share. The initial margin is 50%. With a maintenance margin of 30%, what is the stock price at which there will be a margin call? If rather than short selling the shares you buy them on margin, explain how the definition of the margin would change.
You have gathered the following information for a company: The current price-to-earnings for the firm is The expected Earnings per share for the firm is The current price of the stock is Someone offers you $110 for the stock. What would you do? B Reject the offer as the expected future value is 15 $8.25 Accept the offer as there is a profit of $90.00 $123.75 Accept the offer as the expected future value is less than $110 Reject the offer as you have no idea where future prices will be. $20.00

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Assume you sell short 100 shares of common stock at $30 per share, with initial margin at 50%. The maintenance margin is 35%. How far does the price of the stock rise for you to get a margin call?